Gradual slowdown, weak demand for Ukraine's exports.



1 жовтня 2015 года
ICU

Global economic conditions are negative for Ukraine's economy over next one to two years. Foreign demand is characterised globally by slowing growth. The US economy is growing below expectations, partially due to tightened financial conditions as markets have been anticipating the Fed rate hike from the middle of this year. A sizable share of emerging market nations found themselves in recession as the flight of capital intensified and prices on commodities dropped. Russia's economy is in transition with authorities desperately trying to determine what kind of economic model will suit their interest best. We argue that Russia's new militarism that covers up the economic transition is a long-term development that is expected to span through 2018. Hence, Ukraine's share of Russian imports should remain subdued during this period (staying at the current 3% after halving since 2012). In China, its economic transition affects the global economy by reducing commodity prices. China's industrial sector has been experiencing deflation of prices on its produce since 2012. Deflation accelerated in August to nearly 6% YoY, supporting our view that the Chinese currency is dear and subject to further weakening not against the US dollar but against the euro, too. Hence, as the yuan's near 3% devaluation in August is not a singular event, there should be more weakness in the Chinese currency.

For more details, please refer to the section "Global economy" on page 13.

Источник: ICU

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